The Nigerian Investment Climate & OpportunitiesDebt Stock at $69.61 billion: Domestic- $60.09...

Presentation Outline

• Nigeria – Location & Data

• NIPC Mandate

• Nigeria’s Economic Performance

• About NIPC and OSIC

• Investment Policy and Framework

• Investment Incentives

• Investment Opportunities

• Conclusion

Nigerian Investment Promotion Commission

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Situating Nigeria in Africa


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Nigeria Situated in West Africa with total land

area of 923,768 sq km- Gateway to

West Africa Market

Government – Democratic

6th largest Population in the World –

over 170 million people

36 States

Capital City – Abuja

Official Language – English

Currency – Naira (N)

Time Zone – GMT +1

Diverse culture- over 250 ethnic

groups.

Third tier of government consists of

774 local government areas.

Nigerian Investment Promotion

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Nigeria’s Economic Performance

Nigeria ‘s GDP is $509.9 billion ahead of South Africa which currently has a GDP

of $384.3 billion making it Number one biggest economy in Africa and more

diversified.

- Growth has primarily been driven by non-oil sector

- Agriculture: 23.3% of GDP, Industry: 24.8% of GDP, Services: 51.8% of GDP.

Real GDP growth projection for 2015 is put at 6% (IMF projects 7.3%)

Annual inflation: Trending between 8.1%-8.4% between Q4 2014 and Q1 2015

Debt Stock at $69.61 billion: Domestic- $60.09 billion, External- $9.52 billion

Debt to GDP is low at $13.65%

External Reserve is at $37.55 billion

Current Account has weakened in recent times but still in surplus at 4.19%

Unemployment rate: 23.90%

Labour force: 27.21 million


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Nigeria’s Economic Performance: cont..

Nigeria has moved up 11 steps to number 26th largest economy globally

ahead of countries like Austria, Venezuela, Columbia, Thailand, Denmark,

Malaysia and Singapore.

Exports as percent of GDP(Exports of goods and services): 18% - World Bank

2014

The external reserve - $37.55 billion

Among the Next 11 leading ‘Global Growth Generators’ (3G) over the next

40 years (Goldman Sachs, 2005)

One of the MINT (Mexico, Indonesia, Nigeria & Turkey) Emerging Market

Economies with potential for High Return on Investment (RoI) in the next

ten years (Fidelity International, 2011)

Ranked Highest recipient of FDI inflows into Africa (over $20.02b) in 2013 –

(UNCTAD 2014)


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ABOUT NIPC

The Investment policy of the Federal Government of Nigeria is housed in the Nigerian

Investment Promotion Commission Act (NIPC), established by Act of Parliament No.

16 of 1995:

– to among others, co-ordinate, promote and facilitate domestic and foreign investments in Nigeria

– develop investment friendly policies that are globally competitive

– ensure the free flow of foreign direct investment (FDI) into all sectors of the economy.

– support and provide necessary assistance and guidance to foreign and domestic investors in Nigeria

– develop and implement innovative, focused and effective Investment promotion strategies

– advise government on policy matters

• fiscal and non-fiscal measures designed to promote industrialization and sustain the enabling environment

– investor match-making


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NIPC STRATEGIC ROLE IN THE ECONOMY & SERVICES

TO INVESTORS

Provide effective remedies:

Establishment of Zonal Offices to promote domestic investment and provide Aftercare

Services

Facilitate the establishment of One Stop Investment Centers in the States

Provide Solutions to Investors’ Concerns:

-The Development of the Sector Specific Investment Incentives Policy:

(Incentives Policies that are sector-specific, aimed at eliminating, as much as possible, the

need for special privileges and concessions, unless where it becomes extremely necessary)

Arrange and coordinate site visits as part of pre-investment activities and post –investment

services.

Provide prompt assistance to investors through dedicated Account Officer /Team to projects.

Systematic feedback from investors

Work with decision makers/opinion leaders


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The One-Stop Investment Centre (OSIC)

• OSIC is government’s strategy aimed at

– streamlining the investment procedures

• remove all bottlenecks in business legalization

procedures

– provide prompt, efficient and transparent service

– coordinate investment facilitating related agencies

• 26 Government Ministries and Agencies

• Services at the Centre, includes and not limited to

– Business Incorporation/ Registration, Grant of

Approvals, Permits/License and Investment

Information & Data

• More centers to be opened in Lagos, Port-Harcourt and

Kano (All States of the Federation)

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INVESTMENT POLICY

• The Nigerian Investment Promotion Commission Act 16 of 1995 sets out the

investment policy:

1. Ownership

– 100% ownership assured except investment

– listed under the ‘Negative ‘ lists

– covered by the Nigerian Content and Cabotage Act.

2. Incorporation

- Foreign enterprise shall not commence business except it is incorporated

under the Companies and Allied Matters Act.

3. Registration of foreign enterprise with the NIPC

–Investment Protection Guarantees

– Non-expropriation of Investment: The NIPC Act 16 of 1995 guarantee that ‘no

enterprise shall be nationalized or expropriated by any government of the

federation’

• The Foreign Exchange (Monitoring & Miscellaneous Provisions) Act 17 of 1995:

– 100% Repatriation of Profit

– Under the Act 17 of 1995, investors are free to repatriate their profits and

dividends net of taxes through any authorized dealer in freely convertible

currency

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Framework for Doing

Business

(A) For establishing a new business in Nigeria the following

processes are required:

i. Incorporation with Corporate Affairs Commission (CAC).

ii. Registration of business with foreign equity with the Nigerian

Investment Promotion Commission ( NIPC).

iii. Registration with Federal Inland Revenue Service (FIRS)

(B) Required additional operating Licenses/Permits in certain sectors:

For Investment in Banking and Finance, a License from the

Central Bank of Nigeria is required.

Solid Minerals – a License from Federal Ministry of Mines &

Steel Development, is required.


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Framework for Doing Business: cont….

Investments in Power generation and distribution, a license from

the Nigerian Energy Regulatory Commission (NERC) is required.

Information Communication Technology (ICT) : a License with

either Nigerian Information Technology Development Agency

(NITDA) or Nigerian Communication Commission (NCC) is

required.

Food and Pharmaceuticals – a License with National Food and

Drug Administration and Control (NAFDAC), is required.

Companies in manufacturing activities must obtain SONCAP

Certification for its products from the Standard Organization of

Nigeria (SON).

For any project that has environmental implications, a

comprehensive Environmental Impact Assessment (EIA) must be

submitted to the Federal Ministry of Environment.



Investment Incentives STATUTORY INCENTIVES:

Pioneer Status – 3- 5 years Tax Holiday

Repatriation of Profit (100%)

Capital Allowances:

-Research & Development - 140%

-Minimum local raw materials utilization – 20% for 5 years

Value Added Tax (VAT) regime of 5%

EXPORT INCENTIVES

Regulatory Incentive

Free Export Processing Scheme

Financial Incentive

Export Expansion Grant (EEG) – up to 30% of Value.

OTHERS

Employment Tax Relief

Infrastructure Tax Relief (Power Sector)


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Specific Fiscal Incentives Sugar

• Machinery and Spare Parts for the establishment of Local sugar manufacturing industries

attracts 0%

• Sugar Cane to sugar value chain investors enjoys five (5) years tax holiday

- Raw sugar attracts import duty rate of 10% plus a levy of 50% while refined sugar attracts import

duty rate of 20% plus a levy of 60%

Aircraft – All commercial aircraft and aircraft spare parts imported for use in Nigeria attracts import

duty rate of 0% and 0% import VAT

Solid Minerals - Machinery and Equipment imported for the development of the solid minerals

sector attracts import duty rate of 0% and 0% import VAT

Agriculture

• Machinery and equipment attract zero percent (0%) duty

Power

• Equipment and machinery attract zero percent (0%) duty

Other Fiscal Incentives:

• Tax Relief on Interest Income

• Capital Asset Depreciation Allowance


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Why Invest in Nigeria

Huge Market: over 170 million, supporting additional 230 million in the sub region.

Abundant natural resource endowments:

Untapped mineral resources which include 7 commercially available minerals like gold, bitumen, limestone, barytes, lead, zinc, and iron ore.

Vast arable land and agricultural products like cassava, cotton, cocoa, palm oil, gum Arabic, etc.

Trainable, resourceful and cost effective workforce with 60% as youths

Strategic location – hub of the West and Central African Markets

Relative absence of natural disasters / calamities; i.e. no earthquakes, hurricanes or major floods etc.

Robust and virile private sector such as Dangote, Honeywell, Nestle, Unilever, Glo, etc.

Highest Return on Investment (RoI) in Africa:

-35% - 45% generally, & 70% in some sectors

Attractive Incentives: 3-5 years tax holiday for pioneer activities


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Why Invest in Nigeria: cont…

Nigeria is projected to be the 3rd largest world population and

market in the next 30 years

Member of ECOWAS- expansion into the regional market of member

states can be leveraged by investor

The Nigerian growth model is consumer-led accounting for Africa’s

largest market with a growing middle class of 23 per cent of the

population.

It is projected that by 2050, Nigeria will have one of the youngest

populations in the world


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Nigeria's FDI Profile FDI inflow of over $6billion in 2014

Prominent FDI Inflow between 2013 -2015 include but not limited to:

14 European countries under the auspices of Italian based consulting firm, AFRIT

Integrated Consult, set invest billions of dollars in the Q2 of 2015

Unicem Establishes $500 Million Second Cement Line Project

Procter and Gamble Building $200 million baby-care products plant in Nigeria

Copperbelt Energy Corporation (CEC) of Zambia to invest U$164 million for a 60

percent stake in Nigeria’s Abuja Electricity Distribution Company (AEDC).

The Federal Government of Nigeria and General Electric (GE) Company of the

United States sealed a $1 billion (N158 billion) investment deal for establishment

of a new manufacturing and assembly facility in Calabar, the Cross River State

capital.

Indorama Eleme Fertilizer and Chemicals Limited Nigeria (IEFCL), a subsidiary of

the Indorama Corporation of Singapore, to build a US$1.2 billion fertilizer plant

in Nigeria.


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Nigeria's FDI Profile

over $1.3 billion Western Metal Products Company Limited’s (WEMPCO)

cold roll steel plant with production capacity of 700, 000 metric tonnes, built

in Ogun State.

Chinese firm, Sino Arab Energy, SAE, in partnership with a local firm, Osabo

Refining and Petrochemical Industry Limited, builds a $7.5bn refinery in

Akabuyo, Local Government Area of Cross River State.

PZ Cussons in partnership with Singapore's Wilmar International Invests

$612 Million in Palm Oil Refinery.

Dangote to Build $2 Billion Fertiliser Plant, the biggest in Africa in

Agenebode, Edo State

Port operator International Container Terminal Services (ICTS)Inc. builds and

operates a $1.4 Billion major container terminal in Nigeria’s Lagos Free

Trade Zone that is expected to be the largest terminal in sub-Saharan Africa

once operational in 2016.


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Investment opportunities in

Agriculture

• Staple crops- Rice, cassava, maize etc: Nigerians are huge consumers of

these staple crops with added market from the ECOWAS Region.

• Opportunities are mostly in the agro processing/agribusiness of these crops

and includes:

Cassava:75, 000MT Cassava processing Mill- About $30m investment in

Kwara and Kogi states

Rice Processing- rice farm, rice mill and integrated processes: About $30m

worth of investment in:

i. US$7.8M for 3,000HA Farm,

ii. US$6.6M for 30,000MT Mill,

iii. US$14.3M for 3,000HA Farm and 30,000MT Mill

Investment in Beef Processing: Feedlots, IntegratedProcessing, Slaughter

House, Ranch etc: Over $30m across the north and southern states of the

Federation.


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Investment opportunities in

Agriculture: cont…..

Investment in Tomato Processing:15,000MT Processing Plant worth about

$5m across 12 states of the Federation-Kano, Jigawa, Kaduna, Gombe,

Sokoto, Bauchi

Pineapple Processing:4,000MT Processing Plant and raw materials: about

$24m worth of investment in across nine states of the Federation- Abia,

Akwa Ibom, Benue, Enugu, Imo, Ondo etc

Detailed information about these projects and others in fish farming, poultry

and other crops can be made available and discussions on them can be

arranged with the sector regulators.


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Investment opportunities in the

Nigerian Solid Minerals Sector

Barytes: Estimated 21,123,913 metric tons of the minerals in Benue,

Cross River, Nassarawa and Taraba states.

Coal: The current coal resource deposit is put at 1,487 million

tonnes across Anambra, Kogi, Benue and Enugu States.

Gold in Nigeria is found in alluvial and eluvial placers and primary

veins from several parts of supracrustal (schist) belts in the northwest

and southwest of Nigeria. The most promonent occurences were

found in Zamfara, Kaduna, Kebbi, Niger, Kogi, Ogun, Osun and

Kwara States.

The Itakpe Iron Ore facility in Kogi state is very notable for its

importance in feeding the Ajaokuta Steel Rolling facility. Iron ore

resources of Nigeria exist for the deposits in the Northwestern and

Southwestern Nigeria

Nigeria has abundant Tarsand and Bitumen deposits across the

Ondo,Ogun, Edo and Benin belts.


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Investment opportunities in the Nigerian

Solid Minerals Sector

• The only source of bitumen at present in Nigeria is the Kaduna Refinery

which processes imported heavy crude. This is insufficient for domestic

needs, thus, Nigeria imports bitumen to supplement her internal production.

• The unique quality of Nigerian Bitumen includes:

i. Extracted bitumen from the tarsand belt can be used as feedstock for the

Kaduna Refinery; and for setting up other bitumen processing units to meet

both domestic and West African sub-regional needs.

ii. The bitumen is uniquely aromatic and naphthenic in composition, thus can

be used for the manufacture of naphthenic base stocks for industries

specializing in critical application products.

iii. Heavy and extra-heavy crude can be extracted from the Nigerian tarsands.

This can be upgraded to synthetic crude oil or syncrude specification

tailored as feed stock to refineries.

iv. Sulphur and phenol can be derived from it.


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Investment opportunities in the

Nigerian Solid Minerals Sector.

Cont.. • Laboratory tests have shown that specification grade grease within NLGI

classification number 3 and 2 (i.e. soap and clay based respectively) suitable

as lubricants for plain and roller bearings, and as sealant can be made from

the tarsand's oil.


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Investment Opportunities in the

Nigerian Power Sector

As earlier mentioned, Nigeria has a population of over 170 million people.

For a country this large, the power statistics looks like this:

• Total energy consumption: 1,259 TWhr per annum

• Total production: 19.78TWhr per annum

• Consumption per head: 8.1mw per head

• Access to electricity: 51%

• Peak generation to date: 4,500mw

• United Nations has projected that Nigeria’s population will peak 230 million

in the next 20 yrs.

• The implication is that:

i. Nigeria needs 135GW1 of capacity to supply a projected 230m Nigerians.

ii. Build power plants at 7 GW/year for the next 18 years. Only two countries

– China and US – have achieved this.


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Investment Opportunities in the Nigerian

Power Sector. Cont..

• Huge energy resource abound in Nigeria:

i. Large hydropower : 11,500MW

ii. Small hydropower : 734MW

iii. Solar : 3.5 – 7.0 kW/m/day

iv. Sun shine : 4 – 8 hrs/day

v. Wind :2 – 6 m/s @ 10m height

vi. Biomass – animal waste :61 mill tons per year

vii. Crude oil 36.2 billion barrels

viii. Natural gas 187 trillion scf

ix. Coal and lignite 2.7 billion tons


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Investment Opportunities in Waste

Management- Waste to Wealth

• Waste Conversion. Lagos State alone ( 18millin population) can

generate close to 1000MW of electricity from its waste, at an initial

capital investment of USD4 billion. Lagos produces 9 000 tonnes of

waste per day from its 18 million population.

• An estimated 5million tonnes of waste is generated per annum in

Nigeria.

• Apart from the energy potentials, this represents huge investment

opportunities in :

i. WASTE STORAGE & CONTAINERIZATION

ii. WASTE COLLECTION & TRANSPORTATION

iii. TRANSFER STATIONS & DROP-OFF POINTS

iv. SOLID WASTE TREATMENT & DISPOSAL: Integrated Solid Waste

Management Facility for further processing, landfills and

dumpsites.


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Investment Opportunities in the

Real Estate Sector Although the New World Wealth (NWW) report notes that Nigeria's commercial

property market performed poorly during 2007 -2013 with prices falling by 3% in US$

terms, in the local currency Naira (N) terms, prices were up by over 20%.

• Currently, there is over 200,000m2 of retail developments under construction mainly

concentrated in the South of Nigeria. These include Port Harcourt Mall (11,000m2)

which is almost 90% leased, The Owerri and Delta Malls measuring 12,000m2 and 15,

000m2 respectively and set to open in 2015.

• In Abuja, Jabi Lake Mall currently under construction will see global brands such as

Versace, Armani Jeans, Swarovski and Jack Jones enter Nigeria for the first time.

• Across the country, real estate investment opportunities abound in :

i. House/Building Renting

ii. Land Flipping/Reselling

iii. Open Space Leasing/Letting

iv. Property Development/Management

• Nigeria provides favorable Land Use Act


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Conclusion

• Investment opportunities abound in all the

sectors of the Nigerian economy. However, the

focus of President Muhammadu Buhari’s

administration is to develop enablers of rapid

industrialization through the sectors highlighted

above.

• The sector regulator are on hand to provide

technical and detailed information on sectors of

interests.


Commission 27


Thank You Uju Aisha Hassan Baba (Mrs.), OON

The Executive Secretary/CEO,

Nigerian Investment Promotion Commission (NIPC)

Plot 1181 Aguiyi Ironsi Street

Maitama District, Abuja, Nigeria

[email protected], [email protected] www.nipc.gov.ng

Visit NIPC Social Media @

• Facebook.com/nipcng

• Twitter.com/nipcng

• Youtube.com/nipcng


Commission 28

mailto:[email protected],[email protected]

http://www.nipc.gov.ng/


The Nigerian Investment Climate & OpportunitiesDebt Stock at $69.61 billion: Domestic- $60.09...

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